Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I will make my point on the overall issue. My concern about this section, which deals with REITs, is the tax that will be paid now on the disposal of property. It will not be capital gains tax at 33% but, presumably, class 4 corporation tax at 20%, which is not what other companies would pay if they were disposing of properties. This refers back to my earlier comments. This is property being disposed of by a type of company or structure where any other company would have to pay capital gains tax on it. The amendment I tabled, which was ruled out of order, proposes that capital gains tax should apply regardless of whether it is being reinvested into the company. That is what applies to any company involved in property transactions. I feel strongly about this but I will not say anymore about it because I rehearsed it earlier.

With regard to section 28, I welcome the closure of this loophole, which requires a REIT to be in operation for 15 years. I made my point on Second Stage and I will repeat it now. Let us consider the reality if the REIT is in operation for 15 years and take the example of the REIT that is currently involved in a sale, Green REIT to Henderson Park, of €1.3 billion of assets. Let us say it was operational for the past 15 years. That would mean those assets could be valued at the date of transaction and, therefore, there would be no capital gains to be paid on the transaction. That is what is happening at present. The Minister is introducing this measure which, I guess, would have an impact in respect of the sale to Henderson Park, but it should apply even if the REIT is operational for 15 years. If a REIT is getting out of the market, selling its assets and it is not going into another REIT, why would we allow capital gains tax not to be applied in respect of the significant uplift that happened? In the case of Green REIT, the appreciation of the assets within that fund structure is €300 million and the capital gains tax that must be paid as a result will be €100 million. When this measure was identified on budget day, there was no attributable income. Can the Minister confirm that the measure will bring in anything up to €100 million or can he give us an indication of where it would apply?

The reason I ask is that we need to know as legislators, as this is highly technical, if there is some other loophole here that allows for this sale to go through without capturing it. I presume that this is about capturing a REIT that is only in operation for four or five years, is now disposing of all its assets and is able to use that structure to secure a huge win for its investors of up to €100 million.